Beyond Compliance: Turning ESG into Gold for Accounting Firms

00:00:00.450 [Music]
00:00:11.480 good morning good afternoon and good
00:00:12.840 evening to everyone that’s listening
00:00:14.160 into this amazing podcast 50 Shades of
00:00:16.840 accounting where we don’t just talk
00:00:18.439 numbers we talk about strategy growth
00:00:21.240 and all the different topics that are
00:00:22.760 actually shaping the future of
00:00:24.119 accounting you know I’m your host prit
00:00:26.160 and today we’re going to be diving into
00:00:27.679 the hottest topics of the industry that
00:00:29.800 is
00:00:30.679 ESG I’m sure you’ve heard it
00:00:32.759 environmental social and governance but
00:00:35.320 what does it really mean for the
00:00:36.800 accounting firms and how we can turn
00:00:39.200 compliance into a gold marine stick
00:00:41.640 around because we’re here to break it
00:00:43.520 all down right here in 50 Shades of
00:00:46.520 accounting today we have a special guest
00:00:49.199 with us you know he brings in 40 plus
00:00:51.239 years of experience and will be giving
00:00:53.399 us all the hot details around ESG I will
00:00:56.600 let Peter introduce himself hello Peter
00:00:59.280 a very warm welcome to the EST show
00:01:01.039 today hi prmth and thank you for giving
00:01:03.680 me the opportunity to come on the
00:01:05.760 podcast today and hello everybody
00:01:08.320 wherever you are um so I’m Peter
00:01:10.759 Ellington uh I’m a Doctor Peter
00:01:12.840 Ellington actually I have a Doctorate in
00:01:14.759 Education and uh I run a an accountancy
00:01:18.920 practice called triple bottom line
00:01:22.040 accounting uh and we employ uh 12 people
00:01:25.119 in the UK and we have three people
00:01:27.560 working with us from uh QX in India
00:01:30.960 triple bottom line accounting um this is
00:01:34.799 a concept which is
00:01:37.119 uh people planet and prosperity and uh
00:01:41.840 or people planet and profit but we call
00:01:44.759 it Prosperity because we kind of like
00:01:47.399 looking at uh what makes us prosperous
00:01:50.479 and it isn’t just money thank you so
00:01:52.119 much p and I think it’s worth mentioning
00:01:54.560 you’ve been part of the judging panel at
00:01:56.200 the accounting Excellence as well for
00:01:57.880 this specific category as well
00:02:01.000 yes that’s right there’s three of us uh
00:02:04.159 and I’m one of the judges on the ESG
00:02:07.880 prior award so as an accountancy
00:02:10.280 practice we do what you’d expect an
00:02:12.200 accountancy practice to do I.E sets of
00:02:14.560 accounts tax returns we do a little bit
00:02:17.519 of R&D we’ll we’ll help um people get
00:02:20.640 ready for investors and so on and but in
00:02:23.599 addition we do management accounting and
00:02:26.120 advisory but also Net Zero assessments
00:02:30.000 and recently we’ve been awarded quite a
00:02:33.000 large ESG project so uh being a judge of
00:02:37.519 the ESG Awards was fantastic because I
00:02:41.200 can see what other practices are doing
00:02:44.120 in this space and uh and G gives us some
00:02:47.959 strategic advantage to see what’s going
00:02:50.920 on but it it’s not really about a
00:02:53.120 strategic Advantage it’s more about
00:02:55.720 seeing where the rest of the accounting
00:02:58.000 profession is so we can collaborate
00:03:00.560 because our purpose is really to show
00:03:03.680 how an accountancy practice can be
00:03:05.799 involved in these things um and why they
00:03:08.599 should and justifying it by showing that
00:03:11.560 how successful we can be be by being in
00:03:14.640 this
00:03:15.640 space thanks thanks so much Peter and
00:03:18.159 and we would definitely would love to
00:03:19.720 dive deep right in to understand what
00:03:21.480 the CSG is about so Peter why is
00:03:24.120 everyone talking about ESG these days
00:03:26.040 and you know what’s driving its growing
00:03:28.720 importance you know particularly for the
00:03:31.000 accounting okay so I think you have to
00:03:33.200 layer the accounting profession to some
00:03:35.319 extent you know looking at the big four
00:03:37.959 and then looking taking a UK environment
00:03:40.200 we then have mid-tier uh practices the
00:03:42.560 next 50 and and then you have the
00:03:44.640 smaller practices like mine less than a
00:03:46.879 million pounds in turnover um and I
00:03:50.000 think that structure is true across the
00:03:52.680 globe you get these big bigger players
00:03:55.200 uh and then mid tier and then smaller um
00:03:58.120 the top tier they
00:04:00.360 now you know take the kpmg’s PWC deits
00:04:03.519 of the world they’ve now got
00:04:05.760 environmental um and ESG or
00:04:08.879 sustainability all these different terms
00:04:10.920 of the same thing consultancies now um
00:04:14.200 because they deal with the larger
00:04:17.519 organizations and larger organizations
00:04:20.639 have um their Stock Exchange
00:04:23.080 requirements to do reporting and those
00:04:26.000 reporting requirements be driven very
00:04:28.440 much by the investor communities and for
00:04:31.759 an investor um ESG sustainability issues
00:04:37.240 are a a risk to their investment um
00:04:40.960 we’re seeing this in uh Florida for
00:04:43.600 example in America whereby that uh th
00:04:47.479 that damage that is being done by
00:04:50.000 hurricanes is worse because of climate
00:04:52.639 change now that creates a greater insur
00:04:55.919 Insurance risk and of course if we can’t
00:04:59.080 insure or Insurance gets more expensive
00:05:01.960 it gets more expensive to run businesses
00:05:04.039 and we’re not talking trivial amounts
00:05:05.960 we’re talking billions and trillions and
00:05:08.880 if climate change it worsens which which
00:05:11.720 is predicted if we carry on um burning
00:05:15.280 fossil fuels at the same rate that we
00:05:17.720 are um then these issues these weather
00:05:21.440 events and issues are going to get worse
00:05:23.360 and it’s going to get more
00:05:25.759 expensive thanks for that be I think I
00:05:28.440 was curious to know you know when we
00:05:29.840 talk about the the es regulations you
00:05:32.199 know who’s exactly affected by it and
00:05:34.600 you know why is it relevant across
00:05:36.400 different Industries across the globe we
00:05:39.840 get these categorizations of companies
00:05:43.319 into uh large medium siiz small and
00:05:47.880 micro so it the larger organizations are
00:05:52.120 being driven by the international the
00:05:56.120 issb standards I I the F FRS has
00:06:01.560 introduced um sustainability standards
00:06:05.039 and we’ve got S1 and S2 in at the moment
00:06:07.759 S1 is a is a sort of like what they’re
00:06:11.000 going to do generally around
00:06:12.840 sustainability type issues and S uh 2 is
00:06:17.520 specifically about climate change but
00:06:19.720 we’re going to have a whole series of
00:06:21.360 those uh including biodiversity and and
00:06:25.280 other issues around there so um we start
00:06:31.160 really by having the requirement for the
00:06:33.800 larger
00:06:34.960 organizations a larger organizations are
00:06:38.120 having to uh
00:06:40.599 report um through their governments
00:06:42.800 adopting these standards into law
00:06:45.599 they’re having to report their carbon
00:06:47.880 Footprints and then they’re having to
00:06:49.919 report uh their plans to reduce their
00:06:52.720 targets so that they get to Net Zero
00:06:55.560 being um 10% less you know down to 10%
00:07:00.479 of your starting number when you first
00:07:03.000 started measuring um so we’re seeing
00:07:05.720 that um as a requirement and then we’re
00:07:08.039 getting other requirements um in
00:07:10.720 addition to uh climate change carbon
00:07:13.160 accounting requirements coming in um uh
00:07:18.199 for larger
00:07:20.400 organizations for biodiversity reporting
00:07:23.840 and then social reporting as well so
00:07:26.160 there’s a whole change to reporting it
00:07:30.720 requirements and uh it’s called
00:07:33.560 integrated reporting and we’re reporting
00:07:36.280 on different capitals besides just the
00:07:39.680 financial
00:07:41.160 capitals so so Peter are are there any
00:07:43.919 specific businesses or organizations
00:07:46.560 that must comply with these ESG
00:07:48.960 standards the requirement is across the
00:07:51.120 the whole economies and it’s not
00:07:54.440 specific to certain
00:07:57.199 sectors so I mean an accountant or
00:08:00.800 usually the accounting firms would say
00:08:02.520 you know this wouldn’t apply to me or uh
00:08:06.440 yeah it it wouldn’t impact me at all but
00:08:09.680 what is the role of an accounting firm
00:08:12.599 you know you’ve been part of the ESG um
00:08:15.560 the work you’ve been doing what is the
00:08:17.240 role of an accounting firm if you would
00:08:18.800 like to just talk more about it okay so
00:08:22.159 I’ve start I’ve started explaining that
00:08:24.800 the requirement is at the moment with
00:08:27.159 larger organizations
00:08:29.759 and for those larger organizations the
00:08:32.159 accounting firms are dealing with
00:08:34.360 integrated reporting mainly as a
00:08:36.559 requirement so they’re they’re reporting
00:08:39.479 to standards that are being set and
00:08:42.240 they’re reporting their carbon footprint
00:08:46.560 they’re reporting their effect on nature
00:08:49.800 and
00:08:50.600 biodiversity ecology if you like they’re
00:08:52.800 also reporting their their s their their
00:08:56.320 social impact and it’s all part of their
00:08:59.040 annual report in account as to what they
00:09:01.320 release and what we’re seeing is is
00:09:03.440 those organizations are getting better
00:09:05.959 prepared for managing the risks that
00:09:08.480 happen as a consequence of the the
00:09:10.360 issues that are occurring globally but
00:09:13.160 also are able to seize on on
00:09:16.160 opportunities um that make their
00:09:18.120 organizations more
00:09:21.320 profitable thanks uh P I
00:09:24.240 think definitely uh more for the
00:09:27.000 accounting firms to do and you know they
00:09:28.720 definitely have a larger role to play
00:09:30.880 but you know how can accounting firms go
00:09:34.000 beyond the usual compliance and you know
00:09:36.120 turn ESG into a business asset for for
00:09:40.600 for their company okay so as I said I’ve
00:09:44.000 talked about the larger firms and and
00:09:46.160 that requirement coming down from larger
00:09:49.000 organizations to medium organizations
00:09:51.440 and over time it’s going to affect
00:09:54.000 everybody okay um because one of the
00:09:57.160 main drivers there is if a large
00:09:59.440 organizations have to report these
00:10:01.200 things they also have to report in their
00:10:03.959 supply chain and ultimately everybody
00:10:06.440 supplies to everybody else and so you
00:10:08.920 get dragged into reporting requirements
00:10:11.680 because your customers want you to tell
00:10:14.880 them about your your environment social
00:10:17.640 and governments and so that’s one way
00:10:19.920 reporting um and how it affects smaller
00:10:22.399 firms for example in the UK in the
00:10:24.240 National Health Service from April
00:10:26.880 2024 there’s a requirement for any new
00:10:30.079 suppliers to have a carbon footprint
00:10:33.399 measurement and to be showing that
00:10:35.320 they’re taking action and now they’re
00:10:37.279 rolling that out across all of their
00:10:39.720 existing suppliers so this means that
00:10:42.920 every Organization no matter how big in
00:10:46.680 the UK if they’re supplying into the NHS
00:10:49.600 they’ve got to be measuring their carbon
00:10:52.000 all organizations like that many more of
00:10:54.160 them and public based bodies and larger
00:10:56.440 organizations they’re adopting that NH
00:10:59.920 uh strategy about improving the carbon
00:11:03.959 footprint of their supply chain and so
00:11:07.000 when you start looking at the UK economy
00:11:09.760 um it’s ripple effect across the economy
00:11:13.000 because everybody is everybody else’s
00:11:15.399 supplier and so uh you know even me I as
00:11:20.240 a small accountancy practice I’ve got 20
00:11:22.839 doctors and Consultants some of them are
00:11:25.120 doing private work into the NHS okay and
00:11:29.320 so over time they’re going to have to
00:11:31.200 have a carbon footprint uh accountants
00:11:33.720 getting to your question accountants can
00:11:36.200 can do this stuff we can we do debits
00:11:38.920 and credits uh we measure people’s
00:11:41.880 profitability or we can also measure
00:11:44.600 their carbon carbon really is just
00:11:46.440 another currency and there’s some
00:11:48.519 different rules about how you do carbon
00:11:50.480 accounting as opposed to tradition
00:11:52.079 traditional accounting but it’s forced
00:11:54.839 firmly into an accountant skill
00:11:58.240 set it’s a very interesting point you
00:12:00.680 made Peter you know when an entity like
00:12:02.720 NHS is requiring its
00:12:05.279 suppliers to actually showcase the
00:12:07.800 carbon footprint you know the suppliers
00:12:10.399 come in all all sizes you know and most
00:12:13.800 of these suppliers they could be working
00:12:16.040 with an accountant and they would be
00:12:19.040 relying on someone to guide them to get
00:12:21.079 their their um metrics around the carbon
00:12:24.440 footprint which they can pass on to the
00:12:26.839 likes of NHS and other entities you know
00:12:29.199 when it becomes standard
00:12:30.880 globally again like you said it’s it’s a
00:12:33.160 role that would come back even to
00:12:34.720 smaller accountants where they would be
00:12:37.279 in that position to to advise uh the
00:12:40.560 suppliers uh working with the NHS then
00:12:43.880 absolutely I’m seeing that already I
00:12:45.600 mean we we’re we’re less than a million
00:12:48.199 pound turnover accountancy practice and
00:12:51.560 uh with 500 clients and we we are doing
00:12:56.040 carbon assessments for organizations we
00:12:58.639 can do their carbon footprint there’s uh
00:13:01.040 the carbon accounting Alliance um it’s
00:13:04.399 made up of over 400
00:13:06.839 organizations and they’re mainly it
00:13:10.040 organizations and they’re developing
00:13:11.959 tools to do carbon accounting uh now
00:13:15.320 there aren’t many accountants in that
00:13:17.639 group uh and in fact I’ve got a an
00:13:20.839 article in the UK business times uh
00:13:24.720 which which is entitled carbon
00:13:26.959 accounting where are the accountants
00:13:29.760 um but however uh this is just a
00:13:31.839 temporary blip I think in that
00:13:34.480 accountants have a natural role in this
00:13:37.000 area because one of the things I say is
00:13:40.480 less carbon will often equal less costs
00:13:45.320 which means more profit and so if
00:13:48.600 there’s if an organization has 10
00:13:52.440 opportunities for example to reduce his
00:13:55.120 carbon an accountant can look at those
00:13:57.880 10 opportunities and look at the cost
00:13:59.759 implications of look at the business
00:14:02.320 case and the cost implications and
00:14:04.199 that’s where the account accountant
00:14:05.519 comes in because they can associate the
00:14:08.079 carbon reduction plan to the business
00:14:10.800 plans and business opportunities and
00:14:12.759 ensure that it’s making Financial sense
00:14:15.320 as well as making sense to the planet as
00:14:17.759 well I think you you did briefly ask my
00:14:20.160 next question that that was going to
00:14:21.759 come up is to what are the different
00:14:23.680 metrics uh for measuring uh ESG and I
00:14:27.000 think one point you talked about is
00:14:28.519 profitably
00:14:29.639 you know how lower cost would mean more
00:14:32.360 profit but when we talk about the the
00:14:34.600 growth growth aspect of it and the uh
00:14:38.360 adding to the brand value could you talk
00:14:40.959 more about how the getting the carbon
00:14:43.079 footprint right can can help in getting
00:14:45.440 those right absolutely I I mean the
00:14:48.440 thing is is once you start looking into
00:14:50.360 this area you realize how big it is um
00:14:53.959 in the UK there’s a whole industry
00:14:56.720 building up around this we have um
00:14:59.600 measurement organizations such as the
00:15:02.000 social value portable we have um
00:15:05.880 measurement criteria called Toms T Ms
00:15:10.880 and these are setting standards for what
00:15:13.240 you might measure under e and G okay and
00:15:18.160 you you start kind of breaking it down
00:15:20.800 if you look at top down you start
00:15:23.399 breaking it down is what what does the e
00:15:26.199 mean okay so the e includ climate change
00:15:30.120 it includes the effect of what you do on
00:15:35.440 Water Management on Waste Management on
00:15:39.279 biodiversity and it that’s another way
00:15:41.759 of looking at it so
00:15:43.600 carbon effect of what you actually do as
00:15:46.279 part of your business and then you could
00:15:48.600 argue that the the third category of the
00:15:50.759 E is what you don’t do the things that
00:15:53.600 you ignore that you’re relyant upon that
00:15:56.040 you might be causing uh uh damage to
00:16:00.440 environmentally and then if we look at
00:16:02.519 the S um the way that we look at the S
00:16:06.759 is that it’s big impact on human
00:16:10.120 resources so what’s your diversity
00:16:13.079 what’s your inclusion what’s your health
00:16:15.279 and safety things that you should be
00:16:16.519 doing anyway um you then look upstream
00:16:19.680 and downstream so your Upstream are your
00:16:22.120 suppliers so what what’s how are they
00:16:24.880 treating their people what’s their
00:16:26.839 Equity diversity and inclusion right and
00:16:29.519 then Downstream is is your is your
00:16:32.240 customer base so you know how are you
00:16:34.680 impacting on your customers what’s
00:16:36.680 what’s their conf right and then the
00:16:38.680 fourth category in the S is around um
00:16:41.560 community and
00:16:42.759 partners and then what are you doing in
00:16:44.920 in your world who’s your community and
00:16:47.399 that could be a local community or it
00:16:49.079 could be the other people that you work
00:16:51.120 with and and what’s your
00:16:53.319 impacts there as well uh and then you
00:16:56.040 get into the G and it’s account that’s
00:16:59.199 where the big accounting thing comes in
00:17:01.560 whereas integrated reporting you’re
00:17:03.759 reporting on the environmental elements
00:17:06.599 you’re reporting on the social elements
00:17:08.959 you’re trying to measure things and of
00:17:11.000 course once you’re measuring them you
00:17:12.679 can then audit and assure them so
00:17:14.760 there’s a whole whole lot of auditing to
00:17:17.160 be done as well ensuring that the claims
00:17:19.559 that people are making in this area are
00:17:22.359 are valid claims and um the whole
00:17:25.359 government’s area is a it kind of like a
00:17:27.760 pull is putting putting the rules in
00:17:30.000 place to ensure that you’re making
00:17:32.760 decisions that include the E and the S
00:17:36.360 and uh yeah so so those are those are
00:17:39.160 kind of the main
00:17:41.120 ESG you thanks thanks for breaking that
00:17:43.600 down into EST and I remember from our
00:17:46.280 initial conversations when we were we
00:17:48.720 were about to engage start working with
00:17:50.400 each other you U you you’d actually
00:17:54.039 gotten Fran into the conversation to to
00:17:56.760 assess us on on how we’ve been dealing
00:17:58.720 with with our people what we’ve been
00:18:00.720 doing as an as an organization so I
00:18:03.440 didn’t realize it until this
00:18:04.679 conversation come in on on the different
00:18:06.600 steps you were taking at your end when
00:18:08.280 you talked about the upward and the
00:18:09.600 downward stream and in working with your
00:18:11.640 suppliers and your partners and how you
00:18:13.720 the importance of assessing them as well
00:18:15.679 so uh yeah I just am able to connect
00:18:18.520 those dots
00:18:19.720 now uh but you know when when we when we
00:18:23.159 talk about um getting the ESD strategy
00:18:27.080 right you know how can how can actually
00:18:29.760 firms um evaluate the the financial
00:18:32.760 impact of these ESC strategies once they
00:18:35.760 want to implement
00:18:37.120 it it’s well it’s interesting that
00:18:39.360 there’s a there’s a thing called the six
00:18:41.280 capitals model um the Acca for example
00:18:45.440 has some lovely reports on integrated
00:18:47.640 reporting of the six capitals but
00:18:49.679 quickly just explain the six capitals
00:18:52.240 they Financial capitals we all
00:18:54.039 understand that that’s the Investments
00:18:55.679 coming in and Loans coming to
00:18:57.480 organizations there’s manufactured
00:18:59.600 capitals those are like um buildings
00:19:02.360 cars things that we make that we have on
00:19:04.120 our balance sheet of course hang on
00:19:05.720 people start to think there’s a double
00:19:07.000 count there well yeah you know different
00:19:09.120 capitals they’re kind of like ring rings
00:19:11.400 within rings and then you have
00:19:13.600 intellectual Capital what what your
00:19:15.320 people know you know their their morale
00:19:18.760 why they go to work what what what they
00:19:20.559 can add um to your business then you
00:19:23.400 start moving into the ESG area the first
00:19:25.960 thing you have human capital okay so so
00:19:29.120 what you where you are in the world what
00:19:31.640 what you know combination of everybody
00:19:34.360 that works for you as well not just what
00:19:36.320 they know but um how how you know how
00:19:39.880 they work together how they inte regate
00:19:42.480 integrate with each other you know most
00:19:44.480 organizations of people aren’t they and
00:19:46.799 then the fifth category is social and
00:19:50.240 relationship capital and so how you know
00:19:53.799 what are your relationships and you know
00:19:56.240 our relation triple botland accounting’s
00:19:58.000 relationship with QX is a Rel
00:20:00.400 relationship Capital that we have that
00:20:02.000 we’re working really well together and
00:20:04.400 uh we getting a greater value with the
00:20:07.760 sum the sum of the two things are
00:20:10.320 greater than the the individual parts
00:20:12.520 and then finally uh natural capitals now
00:20:16.240 um natural Capital being the
00:20:17.240 environmental Capital tools um plus and
00:20:20.159 negative because more carbon you burn
00:20:22.320 negative less govern Burns better but
00:20:24.480 also you can create positive impacts
00:20:27.600 into the environment now the thing is is
00:20:30.120 what we know at the moment is we
00:20:31.840 accountants we measure the financial we
00:20:34.120 measure the manufactured and sometimes
00:20:37.200 we’ll apply for a patent and we’ll
00:20:39.039 manage the
00:20:40.679 intellectual now what we’re seeing is
00:20:43.600 governments saying well we need to
00:20:46.720 change our economy so it’s working in
00:20:49.320 the green economy we’re seeing
00:20:51.440 compelling arguments in that case now
00:20:53.600 regenerated
00:20:55.520 [Music]
00:20:57.039 uh energy which is generated by solar
00:21:00.400 panels and wind and wave Energy natural
00:21:03.760 resources is becoming compelling in that
00:21:07.039 it’s less expensive than energy what
00:21:09.520 governments are doing is they’re
00:21:12.320 incentivizing their organizations
00:21:14.559 through taxes through grants through
00:21:16.840 incentives through cooling organizations
00:21:20.480 to be doing the ESG to be reducing their
00:21:23.559 carbon and this means that these Human
00:21:27.640 Social and natural capitals are
00:21:31.200 monetizing and so they’re going to
00:21:33.320 affect the financial capitals now where
00:21:36.960 where the money is is knowing that that
00:21:41.000 that that’s a fact and so if you can get
00:21:43.200 your organization to start respecting
00:21:46.600 eesg or the Human Social and natural
00:21:48.960 capitals you’re one step ahead of the
00:21:52.120 government changes to incentivize you to
00:21:55.159 do it and so you can turn on that money
00:21:57.840 tap quicker than than anybody else and
00:22:00.320 we live in competitive environments and
00:22:02.960 you’ll be the if you if you can adopt
00:22:05.039 the natural social capitals um at at the
00:22:08.360 at the right point and at the moment
00:22:11.240 it’s for a lot of accountants that
00:22:13.000 aren’t aware of this stuff it’s about
00:22:15.799 getting up to speed starting to learn
00:22:18.880 about what these things are because if
00:22:20.919 you can understand them you can see
00:22:22.559 where the tax breaks are going to come
00:22:23.840 in and the incentives and the grants and
00:22:26.200 then you can help your clients and then
00:22:28.559 then you can charge more fees your
00:22:30.960 clients can be more profitable and
00:22:33.159 you’re basically on the money is it’s
00:22:35.919 comes back to the triple bottom line
00:22:37.440 concept people Planet profit you
00:22:40.720 actually make more money from doing the
00:22:42.039 right things as well so you you’ve
00:22:44.360 actually led me on to my next question
00:22:46.080 in a way I wanted to explore about how
00:22:49.120 um how ESG reporting has opened up new
00:22:52.840 business opportunities you know for
00:22:54.600 firms and at the start of the podcast
00:22:56.679 you didn’t mention about it uh you know
00:22:58.919 you signing up a new uh new client on is
00:23:02.919 could you shed some more light or talk
00:23:04.279 more about how this is opening up new
00:23:06.200 opportunities as well absolutely U um so
00:23:10.559 a small ccy practice we have taken on
00:23:13.919 the ESG strategy review for a large uh
00:23:17.279 lco that’s a local area Trading Company
00:23:20.640 uh they employ um 9,000 people they have
00:23:23.720 Partnerships with local councils across
00:23:26.400 the country okay and we’re uh working on
00:23:29.919 the ESG strategy we did fle maturity
00:23:33.159 Maps where we explained ESG issues for
00:23:36.880 each area environmental issues social
00:23:40.159 issues and governments issues and asked
00:23:42.200 them whether they were beginner
00:23:43.840 intermediate or Advanced and we gathered
00:23:46.080 that information we gathered the
00:23:47.640 information from um what they were doing
00:23:50.720 in ESG and um this organization is
00:23:53.640 working the local government so it’s
00:23:55.480 doing Waste Management it’s doing care
00:23:58.600 homes it’s building roads okay it’s
00:24:01.320 looking after buildings and Facilities
00:24:03.640 okay so there’s a lot of environmental
00:24:05.520 impact and so they’re very good on
00:24:07.960 looking after the environment side of
00:24:11.840 what they’re doing and they’ve got isos
00:24:15.120 that prove that they’re doing well so
00:24:16.640 the government in those issues is very
00:24:18.919 good okay but what we’re seeing is it’s
00:24:21.320 not integrated and they need to look at
00:24:23.440 the whole thing but more importantly
00:24:26.200 they’ve got a massive great big USP
00:24:28.760 they’re doing architectural work for
00:24:30.799 clients in designing buildings for
00:24:32.399 example and they can start bringing
00:24:34.720 additional services in which are looking
00:24:37.159 at the carbon Footprints of those
00:24:38.919 buildings and they’re able then to um
00:24:41.919 charge more consulty consulty fees in
00:24:44.919 bringing in that USP okay um this
00:24:48.080 organization as well is um is involved
00:24:52.720 with uh prisoners and um rehabilitating
00:24:56.880 prisoners into their organization so
00:24:59.600 they they get prisoners um that are
00:25:02.159 manual workers to uh work on building
00:25:05.200 roads for example and um so they’re
00:25:08.320 working very closely with re re
00:25:11.360 reoffending prisoners and the cost in
00:25:13.720 the UK of keeping a prisoner in jail is
00:25:16.360 £60,000 okay a year and so what they’ve
00:25:20.200 done from the social this is the
00:25:22.039 community and partners aspect of their
00:25:24.120 ESG
00:25:25.559 journey is there they’re saving the
00:25:28.600 £60,000 a year by by getting workers
00:25:32.320 into the workplace okay that are then
00:25:34.760 earning a living where they can get a
00:25:36.880 job okay and um creating a much better
00:25:41.120 future for those people so you know
00:25:43.000 we’re talking about it from the
00:25:43.919 financial sense but the what what the
00:25:46.520 effect on society is massive and then
00:25:51.600 you can then start thinking okay a these
00:25:53.559 guys they’re processing a waste and
00:25:56.480 Plastics and you can make roads out of
00:25:59.080 plastics so you know it’s kind of like
00:26:02.039 add add add add so rather than this lco
00:26:06.399 looking at you know what they do
00:26:09.159 delivering a care home or delivering a
00:26:10.919 road and just making enough money to pay
00:26:14.679 everybody and make a little bit of
00:26:15.960 profit um it’s the the opportunity of
00:26:19.960 ESG is massive you know making
00:26:23.520 roads with reenders just keep them out
00:26:27.039 of the prison system
00:26:29.039 create a much better life for them and
00:26:33.440 then we’re actually reducing the amount
00:26:35.279 of carbon we’re using by reusing the
00:26:36.960 Plastics out of the waste system I mean
00:26:38.880 it’s just kind of like wow add value add
00:26:41.279 add add there there’s compounding effect
00:26:43.440 to it right it just keeps getting bigger
00:26:45.919 and wider as we go along that’s right
00:26:48.360 and it’s you talk about circular
00:26:49.880 economies and it’s you can’t avoid the
00:26:52.640 circular economy effect of um of social
00:26:56.279 of the human side of it you know
00:26:58.279 bringing giving people a purpose Beyond
00:27:00.880 just making a profit or just creating
00:27:05.399 you know doing doing good getting up in
00:27:07.240 the morning and feeling like you you’re
00:27:09.480 doing something which is uh uh positive
00:27:12.240 in the world as opposed to just using up
00:27:14.320 his
00:27:15.240 resources thanks thanks Peter I think
00:27:18.559 we’ve heard quite a lot on ES today and
00:27:20.559 I think U there’s going to be a lot of
00:27:22.320 reading back as well that I personally
00:27:24.200 need to do to make sure I keep up with
00:27:26.200 this ESG topic that’ll keep coming up
00:27:28.679 but you looking ahead you
00:27:30.600 know what should accounting firms do to
00:27:33.240 prepare for the future of ESG and its
00:27:35.640 evolving standards is that something you
00:27:37.760 could you could talk about as well while
00:27:39.480 we while we sign off for this podcast
00:27:42.559 absolutely so one of our mottos is that
00:27:44.919 you start by starting do something okay
00:27:49.000 and there’s some super resources out
00:27:51.960 there there’s in the UK uh there’s a
00:27:55.799 thing called accountant for sustain
00:27:58.159 stainability
00:27:59.799 a4s and this is a charity that was
00:28:02.640 established by King Charles uh 30 years
00:28:05.760 ago and they they’ve got so much in the
00:28:10.159 way of resources it’s a great place to
00:28:12.399 just go look and cruise around their
00:28:14.080 website and see what they’re saying um
00:28:16.880 the accountancy bodies are doing so much
00:28:19.760 in this race um you look at the Acca
00:28:23.679 look at the
00:28:25.000 icw they have courses um that that are
00:28:28.919 20 30 hours where you can um look at um
00:28:33.840 uh the whole topic and you can pick up
00:28:35.840 so much but if you don’t even want to
00:28:37.480 spend 15 hours on that um there’s
00:28:40.159 organizations like Trace who uh do
00:28:43.480 carbon Footprints they have uh three
00:28:45.840 times 1 hour where you can learn about
00:28:48.000 carbon accounting uh there’s another
00:28:49.880 organization in the UK called Green
00:28:51.600 accounting and there’s a day and a half
00:28:53.760 carbon accounting course there so there
00:28:55.760 there’s just so much out there um and so
00:28:58.559 many good good good and useful resources
00:29:02.519 um so you start by starting you start
00:29:04.640 reading up a little bit little bit find
00:29:06.720 out your facts um this is one thing a
00:29:09.799 lot of people are saying certain things
00:29:11.640 aren’t happening there’s some conspiracy
00:29:14.039 theories but if you were going to put
00:29:16.960 your money on a bet you’d go and find
00:29:19.279 out the facts and would you bet on
00:29:22.440 something based on a conspiracy theory
00:29:25.799 or would you try and skirt around a
00:29:27.600 little bit try and get a
00:29:29.640 consensus of of opinion and and I
00:29:32.519 personally would go for the latter but
00:29:34.960 uh that’s my opinion thank you so much
00:29:37.799 for giving us all the reference material
00:29:39.399 I think we uh we have a lot of ground
00:29:41.519 work to do get uh to get up to speed
00:29:43.679 with ESG and and you know how the future
00:29:46.360 is actually changing as we go along you
00:29:48.960 know and Peter we we’ve talked about
00:29:50.799 this and I’ve mentioned in the past
00:29:51.919 change is the only Conant only thing you
00:29:53.600 need to do is keep up with it so so
00:29:56.240 thank you so much for your time today uh
00:29:58.200 uh uh Peter it’s it’s it’s time to wrap
00:30:00.240 up today’s episode of 50 Shades of
00:30:02.519 accounting you know where you’ve
00:30:04.039 actually explored about how ESD isn’t
00:30:06.320 just about checking boxes is about
00:30:08.200 creating new opportunities adding real
00:30:10.720 value to your clients you know if if if
00:30:13.159 you’re not thinking about ESG Beyond
00:30:14.919 compliance you know now is the time to
00:30:16.519 start as Peter said you just need to
00:30:19.279 start right and we’ve heard the
00:30:22.399 accounting firms have a very unique role
00:30:24.200 to play in in shaping the future of of
00:30:26.559 sustainability and governance thank you
00:30:28.279 so much for tuning in everyone and a
00:30:29.880 huge thanks to to Peter for sharing
00:30:31.840 those insights uh if you’re ready to
00:30:33.720 stay ahead for the curve be sure to
00:30:35.880 subscribe and follow us for more game
00:30:37.799 changing conversations until next time
00:30:39.960 I’m prit and this is 50 Shades of
00:30:41.960 accounting thank you so much everyone